Op-Ed: Invest in Environment and Infrastructure, Not Corporate Welfare

Brandon Castro | February 1, 2019 | Opinion
Recent audit shows the wrongheadedness of New Jersey’s efforts to keep business happy with billions in tax incentives

Brandon Castro
It has been more than a year since the Christie administration ended, but it turns out it left one last surprise for New Jersey’s workers and taxpayers, according to an audit released by the New Jersey State Comptroller last month.

The report suggests that, under former Gov. Chris Christie, the Economic Development Authority (EDA) gave away billions of dollars in tax credits to some of the most profitable corporations in the world through an $11-billion dollar series of tax-subsidy programs.

Tax-subsidy programs typically offer tax breaks to businesses, large and small, with stipulations that they create or retain local jobs. This is corporate welfare at its most visible and the results are seldom substantial. Case in point: The EDA under Christie found that the 1,000 applicants for tax cuts estimated 161,804 new jobs would be created and 80,027 jobs would be retained in New Jersey.

The comptroller’s report, however, found a severe lack of oversight. Corporations were, in most situations, allowed to self-report, and often manipulated or obscured details in order to inflate their contributions to our economy: “In 24 of the 37 sampled projects, about 65%, we found close to 3,000 recipient-reported jobs that were not substantiated as having been created or retained.” It is estimated that one in five jobs were not substantiated.

It’s not just a Jersey thing

In other words: New Jersey promised $11 billion in tax subsidies to corporations, asked nicely for them to create jobs, and accepted their data at near-face value as proof that they did. To quote Gov. Phil Murphy: “For the same price as these tax breaks, we could have rebuilt the entire portal bridge, on our own, 7 times.”

This isn’t just New Jersey, though, and this didn’t just happen under the Christie administration. For years, our economy has been the victim of what was once called the “better business climate.” The idea is this: If we cut taxes for major corporations, reduce the power of labor unions, cut direct government spending, and increase privatization, then there will be a boost in profits and investment and all boats should rise.

The result of these economic gymnastics is evident. Average real wages in both New Jersey and across the nation have been stagnant since the late 1970s. States often bend over backwards to throw huge tax breaks at corporations, just so they’ll move their headquarters to the state.

Often these programs are poorly audited, don’t result in sustainable or good-paying jobs, and do very little to decrease unemployment, and lift wages and economic activity at the same time.

But the reason for the gymnastics is apparent: These laws and policies aren’t written for us. They’re not written for workers and they’re not written for the average citizen of New Jersey. They’re written to please moneyed interests, corporate executives, and Wall Street tycoons.

Let’s end the charade

It is time to end this charade and skip the gymnastics. We must make more direct investments in New Jersey’s critical assets that actually support our communities and working families.

In New Jersey, our public transportation is falling apart. And with no substantial dedicated tax fund to invest into our trains, the Transportation Trust Fund is slowly cannibalizing itself as the revenue from commuters goes straight to simply keeping the lights on.

Our state has been more committed to giving away $11 billion to corporations than it has to fixing our broken schools. Many of our schools, especially those in SDA Districts (formerly Abbott Districts), are suffering from severe infrastructure problems, and are unhealthy for our students and school staff. School hazards include lead from deteriorating paint and in drinking water, leaky roofs that can lead to mold growth and poor indoor air quality, and extreme classroom temperatures due to old or inadequate HVAC systems.

Invest in working class

At the federal level advocates are pushing for exciting, innovative ways to think about investing in jobs growth, including a “green new deal” aimed at putting millions to work in good-paying jobs fixing our environment before we suffer the full devastation that climate change will bring.

According to the comptroller’s report, the stated goals of Christie tax-subsidy programs were “enhancing business attraction, retention and job creation efforts, and strengthening New Jersey’s competitive edge in the global economy.” What this report, and what the experience of most New Jersey workers shows, is the ineffectiveness of corporate welfare in achieving those goals.

Highly targeted and carefully monitored tax subsidies might be a good Band-Aid, but New Jersey must invest in its working class and critical assets if we really want to save our economy.